Analysts have recently slashed earnings estimates for a number of big players, and several firms have quietly fired staff. Many more layoffs are expected by early next year.

Reporting from New York — For a while, Wall Street seemed impervious to the economic woes clobbering Main Street, with bank profits, bonuses and share prices rebounding sharply.

Not anymore.

With the country's major banks due Wednesday to start reporting third-quarter earnings, a new pessimism is taking hold on Wall Street based on the growing belief that the economy will remain weak for some time, limiting the industry's ability to make money.

Without strong economic growth, "you don't need as many financial services as we have now," banking analyst Nancy Bush said.

Wall Street analysts who follow their own industry have recently slashed earnings estimates for a number of big players. Several firms have quietly fired staff, and many more layoffs are expected by early next year. There are even predictions of a severe drop in Wall Street's notoriously generous compensation.

"We're going to see a larger increase in unemployment in the financial services than anyone had expected," said Steven Eckhaus, a lawyer who advises banks on employment matters.

Bank stocks have slid since peaking in April. Shares of Bank of America Corp. are down 31%, while JPMorgan Chase & Co. is off 15%.

JPMorgan was expected Wednesday to report sharply lower third-quarter revenue. The two remaining giant firms that are predominantly investment banks, Goldman Sachs Group Inc. and Morgan Stanley, have seen their earnings projections plunge in recent weeks and months.

Rochdale Securities analyst Richard X. Bove felt compelled to apologize recently when he reduced his earnings estimate for yet another bank. "The reasons for the reductions are not due to failures within the firms, but rather the weakness in the industry," he wrote.

Although the newly pessimistic outlook stems in part from recently tightened regulations that will limit some of Wall Street's most profitable activities, the mood largely reflects the persistent sluggishness of the economy.

"Projecting forward it seems like the profits of Wall Street and Main Street are going to be more in sync," said Michael Wong, a bank analyst at research firm Morningstar Inc. "The banks have had to readjust their expectations and to readjust their hiring practices."

Meredith Whitney, one of the most respected analysts following financial companies, recently projected that in the next year Wall Street firms could shed as many as 80,000 jobs — 10% of their combined workforces.

Bank of America, JPMorgan and the Wall Street unit of Britain's Barclays Bank have in recent weeks laid off staff such as investment bankers and traders, according to people familiar with the moves. Morgan Stanley is said to have imposed a firmwide hiring freeze.

Head counts on Wall Street remain down significantly from before the financial crisis, in part because of the collapse of some big firms. But a year ago, the talk was of hiring, not shrinking.

Now many are anticipating a big wave of layoffs early next year. And for those who remain, average compensation per employee will be down 32% in 2011 from 2009's level, industry analysts at JPMorgan forecast.

The gloom and doom has not reached every corner of the industry. Asset management services for wealthy people are doing well, for example. Fee revenue from advising companies on mergers also is up. Such work used to be the bread and butter of investment banks before it was supplanted by profits from securities trading. Last year, for example, the trading desks at Goldman Sachs brought in 76% of the company's revenue.

But among the lines of business on Wall Street, trading could take the biggest hit from the weak economy as well as from new regulatory constraints.

Trading revenues since the spring are already down from their eye-popping levels in the same months of 2009, although that was to be expected.

"You had to be stupid not to make good trading profits last year," said analyst Bush, citing the big stock market rebound that began in March 2009, coupled with the relative ease with which traders can make money in a period of rising share prices and high market volume.

The summer months were "painfully slow" for trading, Jefferies Group Inc. Chief Executive Richard Handler told analysts last month as the mid-size investment bank got a jump on reporting earnings because its fiscal third quarter ended Aug. 31.

Some of the layoffs at JPMorgan and Bank of America were in units doing so-called proprietary trading, which at banks was largely banned by the federal financial regulatory overhaul enacted during the summer. Recently adopted international rules also could reduce trading profits by limiting the amount of money a bank can have tied up in risky activities.

Until recently, banks had expressed confidence in their ability to adapt and even profit under tighter regulation. But a long period of economic weakness, which Wall Street economists now say is likely, is another matter.

If those forecasts are borne out, the industry could see little growth, said Handler of Jefferies, which was hiring furiously early this year.

"If the environment continues to be extremely slow," he said, "all investment banks are going to be slowing down their expansion plans."